The Reserve Bank of India has advised commercial banks to pay interest on savings bank accounts on a quarterly basis or even shorter duration. RBI said in a circular that interest on domestic savings accounts should be credited at quarterly or shorter intervals. At present banks credit interest on savings bank accounts on a half-yearly basis. The interest rate is calculated on a daily basis. RBI had earlier deregulated the interest rates paid on savings banks accounts. However, public sector banks pay 4% interest on savings deposits while private banks offer up to 6%. On higher amounts, banks are allowed to offer differential rates.
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